What are you worth? New salary trends revealed

Garreth Hanley:
This is INTHEBLACK, a leadership, strategy, and business podcast brought to you by CPA Australia.

Christine Gounder:
Welcome to INTHEBLACK, I'm Christine Gounder. In today's episode, we're talking to Caroline Edwards, a senior finance business director at Hays about their latest salary guide. This year marks the 45th year of the Hays Salary Guide, and this year, over 15,000 people across 26 industries responded to the survey.

The report highlights a growing disconnect between employer salary intentions and employee expectations. 86% of employers say they will increase salaries in their next review, while 64% of people cite the rising cost of living as the top reason to look for a new job, and 61% expect a pay rise of more than 3%.

Caroline, what is driving this mismatch and how can businesses reduce this gap and retain talent in a competitive market?

Caroline Edwards:
I feel the mismatch is primarily the result of cost of living pressures, including interest rate rises. And the rate at which these have increased far outweighs the general CPI increases passed on by employers. Employers are generally determining salaries based on individual performance, responsibilities of the role, and typical external salaries for the role.

And while employers are considering cost of living and increasing salaries, they can't increase them at the rate that the cost of living is going up.

According to our salary guide research, employers are prepared to offer above the standard package to secure an in-demand candidate and also offer additional flexibility, higher salaries, and professional development. And the professional development angle is really important to a lot of accountants at all levels.

And this could mean support for CPA studies for those beginning their career, or it might be access and time to CPD courses for those who are already qualified, or it could be a mentor programme or a clear and defined career path for those who are already qualified.

Christine Gounder:
Now while skill shortages are easing, some industries still face significant challenges. What industries are facing challenges? Will this impact accounting and finance workers? And what strategies can be adopted to attract and retain skilled workers?

Caroline Edwards:
I think the professional practice has actually been the industry to face significant challenges in regards to the skill shortage. The balance between supply and demand for accounting talent is a really key factor behind job movements, both into and out of public practise.

To combat some of that talent shortage, accounting firms are training existing staff in new responsibilities, and they're also creating new roles.

But the shortage is being driven by both demand and supply. Demand for accounting industry services has grown and evolved, driven by client businesses increasing need for strategic advice and financial management solutions, and also the growing complexities of the regulatory environment.

On the supply side, there's actually also been a decline in people undertaking an accounting degree, which adds to the skills imbalance.

Christine Gounder:
Thanks, Caroline. What about AI?

Caroline Edwards:
AI is definitely a hot topic at the moment, but I think it's still in its infancy, particularly in the accounting field. Companies have started adopting it, and there does seem to be a view from CFOs that I've spoken to recently that they will adapt their workload and their teams and the way that they do things to utilise AI, particularly in those more routine or mundane tasks, but I'm yet to see it flow through into everyday life.

So I think this time next year we could be talking around this topic a lot more and there will be a lot more information, but it's certainly something to consider for the year ahead.

Christine Gounder:
That's really interesting. Thanks, Caroline. Now hybrid work is the preferred model for most employees, and your report indicates it's here to stay. What does this mean for workplace communication and collaboration?

Caroline Edwards:
Yes, hybrid work and work from home is still a hot topic, despite most companies already having a policy or routines in place. Most companies do endorse remote work policies, which are particularly appealing to younger workers. And they've also coupled that with integrating technology that eliminates manual labour, which plays a crucial role in attracting and retaining talent.

The concern some employers have is that newer staff members are missing out on valuable learning opportunities by not being physically present in the office for those ad hoc conversations or meetings that naturally happen when people are in the same room.

One thing I've read about is actually organisations developing what's called an office value proposition. So it's trying to create a quantifiable benefit to encourage more time in the office. This is obviously gaining traction because it tends to maximise collaboration and focused individual work. It should optimise resources and it should also improve productivity. In terms of matching the work duties to the ideal setting, companies are asking what level of collaboration does each task require? What level of individual work does each task require? What resources does each task require?

And how does each employee work best? So this is something that companies could consider experimenting with and adapting to make sure that they're making the most out of the time that people spend in the office versus the time that they spend at home.

Christine Gounder:
Earlier you talked about professional development and benefits like that, and the report finds salary remains a top priority, but benefits like learning and development are also crucial. According to the report, 77% of people in the survey say they plan on looking for a new job in the next 12 months, and with salary flexibility being low, employee value propositions might be the deciding factor. Caroline, what specific initiatives can companies implement to create a well-rounded employee value proposition? And what should job seekers be on the lookout for?

Caroline Edwards:
Yes, so the ambitions, motivations, and priorities of employees are becoming more fragmented. So with balance, flexibility, and purpose becoming key priorities for many employees, organisations will need to adjust their talent attraction strategies. Interestingly, progression is not a top priority for a lot of employees. 47% of workers said that they are not focused on progression at all, which I found really interesting.

Prospective talent is also increasingly championing personal well-being as a priority, which reflects in their response of work-life balance. I believe companies should be highlighting the unique elements of their culture.

People want to know how it feels to work in the business. They should also focus on their internal training or mentoring opportunities, which obviously is different to just career progression, and also the company's impact in the wider community.

I spoke with a client last week who said that a great deal of potential hires to their business ask questions about their sustainability practices, for example, and they highlight this as being a really important factor in their decision making. So it's not just all about the job and career progression anymore.

Christine Gounder:
Well, now with the cost of living a key driver for salary expectations, how can companies leverage employer branding and diversity, equity, and inclusion initiatives to attract people whose priorities go beyond salary?

Caroline Edwards:
Again, workers are increasingly demanding more equitable workplaces where they feel like they belong, and the majority actually thinks that the onus for ensuring that equality lies with the employer. So progress on DE&I is increasingly critical. 37% of talent worldwide stated they would not accept a job if the organisation wasn't making a proactive effort to level the playing field in that area.

Transparency around reporting on DE&I is also important, especially with a recent push to make public the information around gender pay gaps, for example, being really welcomed by job seekers.

Christine Gounder:
Caroline, the report also mentions a significant increase in temp workers. What does this trend suggest about the future of work and the economy and how can businesses adapt their talent strategies?

Caroline Edwards:
I think the increase in temporary workers suggests that businesses are becoming more flexible in their approach to workforce management, and this could be due to evolving economic conditions, labour market dynamics, and changing business needs. In terms of managing that economic uncertainty and being a bit more flexible, organisations might opt for hybrid-type talent strategies where they balance their core full-time employees for critical roles and a fluid pool of temporary or gig workers to meet changing demands.

This allows for flexibility without sacrificing operational continuity. Of course, that could work the other way around as well. And where I see it being used by clients in the real world is if they're implementing a new system, for example, and they may second their full-time employees to the project to give them more opportunity and room to learn whilst replacing their business-as-usual duties with a pool of temporary workers.

Organisations can also look at specialised talent for short-term needs as well. So if they can build a flexible on-demand talent network to be able to adapt to changing circumstances, that might then mean that they get the talent that they need, but only for the specific timeframe that they need it.

One word of caution is the impact on workforce loyalty and culture when you're bringing in more temporary workers. It can dilute company culture and reduce loyalty if it's not managed carefully. Companies need to be careful to have a strong onboarding process and create a culture that includes both full-time employees and temporary staff.

So this includes regular communication, engagement programmes, and alignment of values to make sure that temporary workers feel as much a part of the broader mission and feel that they can contribute effectively as much as the full-time workers can.

Christine Gounder:
Now the report concludes with this year being the year for action. What steps can our listeners take based on the report's findings to thrive in the current market?

Caroline Edwards:
I think one of the key things for employers is that they must recognise that additional benefits are not just a bonus. They are a must in today's society. These don't have to be monetary, they just need to have value to the demographic of candidates they're looking to attract. So for example, extra loyalty leave or a more generous or considered maternity and paternity leave policy might be attractive to a certain demographic.

I think the majority of employers are still thinking in traditional terms when it comes to benefits, and the report showed that actually the benefits employers are offering this year to retain valuable employees included flexibility, professional development, and performance bonuses.

But I think they're missing a trick if they're not considering things like brand and reputation, as we mentioned before. So positive changes to a company's ESG approach, their DE&I strategies, or their flexible or hybrid setups, or even their office value proposition, and a strong team culture are some of the ways that employers can hold onto valued staff. Candidates do see their work and personal lives now as very much intertwined. So as a result, they are asking their workplaces to be more accommodating of their personal life.

From a candidate consideration point of view, I think they need to be realistic about what that means and understand how they can balance both their personal and professional life while still delivering what's expected of them in a certain role.

Organisations that are refusing to flex will see a fallout in their retention rates. Some of the data shows that up to 76% of all employees would be ready to go elsewhere if their company puts an end to working from home. So that absolutely needs to be considered in the year ahead. As an employee, with skills in demand, you do still have bargaining power, but it's important to avoid pricing yourself out of consideration.

Employers are invested in salary increases, but you have to be realistic about what's happening in the broader commercial environment. You need to consider the whole package when you negotiate a new job or your next pay rise. Think about what you really value and what could make a difference to your life and career long-term.

Christine Gounder:
Caroline, thank you so much for being on the show today and sharing your insights into the Australian jobs market. It's been great talking to you.

Caroline Edwards:
No problem at all. It's been great chatting to you too.

Christine Gounder:
And thank you for listening to INTHEBLACK. Don't forget to check the show notes for resources from CPA Australia and INTHEBLACK and a link to the full 2024 Hays Salary Guide.

Garreth Hanley:
If you've enjoyed this episode, help others discover INTHEBLACK by leaving us a review and sharing this episode with colleagues, clients, or anyone else interested in leadership, strategy, and business. To find out more about our other podcasts, check out the show notes for this episode. And we hope you can join us again next time for another episode of INTHEBLACK.